Delhi High Court
M/S Camron Exports vs Commissioner Of Customs Inland ... on 24 April, 2019
$~2 & 8
* IN THE HIGH COURT OF DELHI AT NEW DELHI
Decided on: 24th April, 2019
+ W.P.(C) 2417/2019
M/S CAMRON EXPORTS ..... Petitioner
versus
COMMISSIONER OF CUSTOMS INLAND
CONTAINER DEPOT & ORS. ..... Respondents
+ W.P.(C) 2523/2019
ELEGANT EXPORTS ..... Petitioner
versus
COMMISSIONER OF CUSTOMS, INLAND
CONTAINER DEPOT & ORS. ..... Respondents
Present: Mr.Akhil Krishan Maggu & Mr.Rishab Nagar, Advocates for
the Petitioners.
Mr.Harpreet Singh, Sr.Std.Counsel with Ms.Suhani Mathur,
Advocate for the Respondents.
CORAM:
HON'BLE MR. JUSTICE S. RAVINDRA BHAT
HON'BLE MR. JUSTICE PRATEEK JALAN
S. RAVINDRA BHAT, J. (OPEN COURT)
%
1. Issue notice. Mr.Harpreet Singh, Senior Standing Counsel accepts
notice.
2. The petitioner states that his bank accounts have been frozen [ICICI
Bank Account No. 25005500904 & IndusInd Bank Account
No.201002412697].
3. The facts are that the respondent/Customs Authorities issued notices
on 06.02.2019, to enquire into allegations of bogus addresses for the
purposes of claiming IGST refunds. The petitioner relies upon the
judgment of this Court in S.B. International vs. The Assistant Director,
Directorate of Revenue Intelligence & Ors., (2018) 361 ELT 305 (Del.). In
that judgment the Court, after considering the provisions of the Customs
Act and other similar enactments, held that the power to freeze or suspend
operations of a bank account cannot legally be exercised. The judgment in
S.B. International (supra) states as follows:
"37. Thus, the amount in a bank account which represents the
sale proceeds of smuggled goods can be confiscated in terms
of Section 121 of the Customs Act and can also be seized
under section 110 of the Customs Act. But, there is no
provision which permits freezing of bank accounts. Even if the
credit balance of a bank account is considered as goods which
can be seized, there is no authority in law to suspend
operations in a bank account.
38. The decision rendered in the case of State of Maharashtra
v. Tapas D. Neogy (supra) is of little assistance to the
respondents as it was rendered in the context of Section 102 of
CrPC. The Court had held that bank account would fall within
the expression "property" which could be seized under Section
102(1) of CrPC. A closer examination of the said decision also
indicates that the Court had proceeded on the basis that the
bank accounts reflected positive balances (credit balances)
and, therefore, represented certain moneys due from the bank.
Indisputably, a credit balance in a bank account is an asset of
the account holder and the said asset may be seized or
attached provided the same is permissible in law. However, if
the bank account is an overdraft account, the same would
represent a liability owed by the account holder and,
therefore, question of seizing the same or attaching the same
would not arise.
39. Freezing a bank account is not the same as seizing an
asset; it interdicts operation of a bank account and it deprives
the account holder of banking facilities. Indisputably, there is
no sanction in the Customs Act for such action.
40. In Shakuntala Singh v. Addl. DRI, Kolkata Zonal Unit
(supra), the Calcutta High Court considered a case where the
DRI had directed the bank with which the petitioner was
maintaining its account not to permit any debts. The Court
held that the DRI was undoubtedly entitled to proceed with the
investigation and take appropriate action against the
petitioner in accordance with law; however, there was no
provision where the DRI could prevent banking operations
pending investigations. The Court referred to Section 121 of
the Customs Act and observed that "the Section can only be
invoked on a specific finding that smuggled goods have been
sold. Operations can only be prevented in respect of the sale
proceeds of smuggled goods". And, since in the said case, no
specific order under Section 121of the Customs Act had been
passed, the Court directed that the petitioner be allowed to
operate its accounts.
41. In Raghuram Grah Pvt. Ltd. (supra), a Division Bench of
the Allahabad High Court had considered a challenge to an
order freezing the bank accounts of the petitioner therein.
Search and seizure operations had been conducted by the
officials of the Central Excise Department in the residential
premises of the second petitioner therein and certain
documents, cash, etc. were seized. The current account of the
first petitioner was also frozen. The application for release of
bank accounts was also rejected. The Court accepted the plea
that since no proceedings under Section 110 of the Customs
Act had been initiated against the petitioner, there was no
justification for debarring the petitioners therein from
operating the bank accounts. The Court passed the following
order:-
"6. As we find no provision nor any authority under
which the bank account can be freezed pending
investigation we are left with no option but to quash the
order dated 16th January, 2004 (Annexure 17 to the writ
petition) and direct the Respondent No.1 to forthwith
release Current Account Nos. 28430 and DRCs Account
Nos. 7538 to 7541 with the Union Bank of India, Banda
Branch, Banda. As the action of the respondent in
freezing the bank accounts have been set aside the
petitioner shall be entitled to operate them."
42. In Mineral Metal Centre (supra), the Calcutta High Court
following its earlier decision in Shakuntla Singh (supra) and
the decision of the Allahabad High Court in Raghuram Grah
Private Limited (supra) held that "that there is no provision
under the Act which confers power on the authority to freeze
the bank account in the pending investigation".
43. In view of the above, the impugned communication
directing freezing of accounts of the petitioner is unsustainable
and is, accordingly, set aside."
4. In the present case, the impugned notices dated 06.02.2019 are, in
effect, identical with that made in S.B. International (supra). They cannot
be allowed to stand; they are hereby quashed and set aside.
5. At the same time, the writ petitioner is directed to join the
investigation proceedings. He shall furnish an undertaking to this effect in
this Court, within a week by way of an affidavit, with a copy to the learned
Standing Counsel for the Customs authorities. The writ petitions are
allowed in the above terms.
6. Copy of the order be given dasti.
S. RAVINDRA BHAT, J
PRATEEK JALAN, J
APRIL 24, 2019
„hkaur‟
